How Russians see their Personal Financial Situation Amid the War
February 2, 2024
  • Vladimir Zvonovsky 

    Professor at Samara State University of Economics

Based on survey data, sociologist Vladimir Zvonovsky looks at how Russians’ ideas about how their own material well-being have changed over the course of the special operation, considering such factors as age, occupation and place of residence.
A view of the city of Belgorod. Now, Belgorod Region finds itself closer and closer to the front line. Source: Wiki Commons
Rosstat reported that real income in the third quarter of 2022 fell 2.8% year-over-year, while in the third quarter of 2023 it was up 4.8% versus a year earlier. Thus, against the backdrop of the so-called “special operation” and the sanctions regime, contrary to the expectations of many economists, Russians’ incomes have not collapsed, but actually inched up, at least according to official data.

Subjective perception of well-being

To understand the economic situation in which the main groups of the Russian population find themselves, it is not only and not so much formal statistical indicators that are important, but rather the subjective perception of the changes that have taken place, since people make decisions based on these perceptions, thus eventually affecting the objective, statistically measured economic situation – their own and that of society as a whole.

If people do not actually sense an improvement in their financial situation, they will not take risks and invest resources in long-term projects. In addition, the perception of the dynamics of their own financial situation also affects what people think about the political situation in the country.

In the second half of September 2023 ExtremeScan conducted a telephone survey of 1,600 adult residents of Russia, who are representative of the country’s population according to key demographic indicators.

About a third (33%) noted that their financial situation has worsened over the past year. More than half (53%) did not see any significant changes, and only about one in seven (14%) reported an improvement in their well-being.

The wording of the questions did not explicitly link the period in question with the conflict in Ukraine, but it was obviously on respondents’ mind. And, as is seen in the data, they assessed the backdrop of the conflict as having negatively affected their financial situation.

There are no significant differences between women and men in how they assess changes in their financial situation. This probably reflects the fact that families are going through the current situation together. That was not always the case: during the crisis of the early 1990s, women assessed their situation much worse than men, which sociologists connected with heightened anxiety. This gender difference has now seemingly disappeared.

However, age turns out to be a significant factor: older respondents perceive changes in their well-being more pessimistically. Whereas every fourth or fifth young Russian (23%) noted an improvement, among the generation on the verge of retirement (50-59 years old) only 8% say this.
At the same time, the oldest age group most often (60%) reports that their financial situation was stable.
Pensioners. The author notes that in the current conditions, Russians who are guaranteed a minimum income in the form of old-age pensions feel more secure than other groups. Source: Yandex
It has been noted repeatedly that in the current conditions of autarky, those who are guaranteed a minimum income in the form of old-age pensions feel more stable than other groups.

Since the conflict started, a new segmentation of the Russian population appeared, tied to where people live: “warring Russia,” “metropolitan Russia,” “deep Russia” and “emigrant Russia.” In the array of collected data, we can distinguish (of course, approximately) the first three groups: residents of borderlands, residents of the capital (and metropolitan Russia ) and the rest of the country.

There are no noticeable differences between “warring” and “deep” Russia, but Muscovites do assess changes in their financial situation more negatively than others. The share of those noting a deterioration is significantly higher than in other regions (38% and 32-33%, respectively). These results partly confirm the conclusions of specialists in Russian economic geography that the downturn brought on by the conflict hit service-sector workers and residents of large cities hardest.

Among the various occupational groups, entrepreneurs and the self-employed feel better off than others. A third of them note a worsening situation (33%), while one in five (20%) said their well-being has improved.

Public- and private-sector workers are both basically in line with the national average. Non-working pensioners are the least likely to note improvements in their well-being (6%), though the share of those who suffered financial losses, according to their own estimates, does not differ from the national average (33%).

Thus, 2023 was a more successful year for the economically active population of the country than for its non-working groups.

Backward-looking personal well-being index

The ratio of the share of those whose financial situation improved over the last year versus the share of those whose situation worsened can be considered an integrated assessment of changes in well-being. If the value of the indicator is equal to one, this indicates equal positive and negative assessments of changes. An index value less than one indicates a predominance of negative assessments, while a value greater than one indicates a predominance of positive ones.

We call this indicator the “backward-looking personal well-being index.” The national average for the index was 0.42, meaning the share of those who saw a deterioration in their financial situation was double the share of those who believe that their financial situation had improved. Among men and women, the index is approximately the same, at 0.46 and 0.38, respectively, but across age groups, on the contrary, it varies greatly: from 0.84 among young people to 0.20 among pre-retirees.

The researchers asked Russians the same question about assessing changes in their financial situation at the end of February 2022 – on the third and fourth days of hostilities – then in August 2022 and September 2023. Traditionally, at the end of winter and beginning of spring, Russians assess their well-being more negatively than in other periods.

At the end of February 2022, 17% of Russians reported that their financial situation had improved from a year before, 31% saw a deterioration and 52% claimed that no significant changes had occurred. In August 2022, the respective shares were 13%, 35% and 52%.

Thus, whereas in the first six months of the conflict Russians began to feel worse – the index decreased from 0.54 in February to 0.38 in August – over the 13 months from August 2022, the index has practically not changed, suggesting that the population as a whole has adapted to the new economic reality. However, analysis of different population groups reveal significant changes.

Differences in index values across social groups show that the impact of the economic downturn was uneven and asynchronous.

Among older Russians at the beginning of the special operation, the index was higher than other groups before steadily declining (from 0.64 to 0.46 to 0.27). At the beginning of the conflict, they likely felt more protected, but over time, probably due to rising prices, this sense dissipated.

Among young people, the dynamics are completely different. At the beginning of the special operation, they noted a tangible deterioration in their well-being (index value: 0.53), but over time young people – who generally adapt to change more easily than older generations – felt that the new circumstances and restrictions were not so drastic and that they could adapt (index value of 0.63 in August 2022 and 0.84 in September 2023).

Intermediate age groups saw more complex dynamics: in August 2022, the index for them decreased before rising in September 2023.
The pre-retirement age group stayed the most pessimistic throughout the almost two years of the conflict, with their assessment of changes in their well-being never improving.
In late May, the town of Shebekino in Belgorod Region became the target of the biggest attack on a Russian town since the start of the war. Source: VK
As Russia became enmeshed in the conflict and inflation rose, Russians of retirement age felt worse and worse off. This trend is even more noticeable among non-working pensioners: in this group, the index was 0.67 in February 2022, 0.50 in August 2022 and 0.19 in September 2023.

Meanwhile, the assessments of the most economically active age groups were relatively low in 2022 amid expectations of an economic collapse, but in 2023, when that collapse did not materialize, their assessments improved markedly.

Inequality rising against backdrop of conflict

From August 2022 to September 2023, the index increased across all occupational groups: public-sector workers (from 0.44 to 0.51), hired private-sector workers (from 0.29 to 0.46) and entrepreneurs (from 0.37 to 0.61).

Those employed in the public sector likely raised their assessments of their financial situation due to government support, payments and benefits.

The rising index among hired private-sector workers also meshes with economists’ observations about labor shortages and rising salaries to attract “working hands.”
In 2023, the trends fundamentally changed: non-working pensioners felt worse off than before and worse than others, while those employed in the private sector, on the contrary, were less likely to note negative changes. Thus, private-sector workers today differ little from their public-sector peers.

This is confirmed by official statistics. In 2022, the government focused on maintaining the income level of the “least financially secure” Russians, who saw their nominal income jump in the third quarter of 2022 by 27.8% year-over-year, while real incomes across the country were down 2.8%.

In September 2023, year-over-year wage growth in nominal terms came in at 14.6%. Thus, whereas in 2022 the least well-off groups felt the impact of government support after experiencing stress in the spring, along with rising prices and an anticipated deficit of goods, in 2023 the downturn was officially said to be over, but the groups most dependent on the state were the least likely to experience this improvement.

The first months of the war economy and sanctions were the hardest for the most well-off groups. Economists have already noted this, pointing out in particular that banks, faced with the difficult situation, essentially confiscated the FX deposits of Russians, who obviously belonged to well-off groups.

After the start of mobilization and the direct involvement of broad swaths of the population in the conflict (not only through physically fighting, but also through defense production and “parallel imports”), the population was given the ability and opportunity to share in the spoils. As a result, these groups began to feel better (though the overall balance of assessments remains negative) than a year before and compared with social groups currently outside the labor market.

This has led to a situation today in which those who are already relatively well-off have a better chance of improving their financial situation. In September, among Russians whose average income over the last three months was no more than RUB 12,000/month, the index measuring their situation in the past year remained virtually unchanged (0.18 in 2022 versus 0.19 in 2023). Yet among Russians who earned more than RUB 70,000/month, the index increased from 0.69 in 2022 to 1.04 in early autumn 2023.
In other words, well-off Russians are generally the only group where most people say that their well-being has improved over the past year.
Yartsevo, Smolensk Region. Source: Wiki Commons
Thus, the conflict seems to be only increasing economic inequality.

‘Metropolitan,’ ‘deep’ and ‘warring’ Russia

At the beginning of the conflict, the difference between “warring” Russia, “metropolitan” Russia and “deep” Russia seemed irrelevant, as the special military operation implied that the military action would be limited and only “specially trained people” would do the fighting.

This perception changed as it became obvious that the conflict would last a long time, in particular when mobilization was announced in the fall of 2022 and the fighting got closer to the regions bordering Ukraine.

At the beginning of 2022 residents of Moscow and most Russian regions assessed the change in their well-being about the same, while differing considerably from residents of the regions bordering Ukraine, whereas after six months of fighting and a broad decrease in the well-being index, the differences between the border versus other regions widened even more (0.25 versus 0.38-0.44, respectively).
However, 13 months later the situation shifted: “metropolitan” Russia and “deep” Russia continued to assess changes in their well-being as before, but “warring” Russia’s assessment notably improved (from 0.25 in August 2022 to 0.47 in September 2023).

This could be driven by less frequent shelling of border areas against the backdrop of a stabilizing situation at the front and/or the inclusion of the local population in the processes of “developing the new territories,” which is generously compensated by the state – for example, building military and civilian facilities, roads and other infrastructure.

In the course of the “special military operation”, Russians’ assessments – from the standpoint of their level of education – also converged. At the beginning of the special operation, holders of university diplomas assessed the change in their financial situation much more pessimistically than Russians who did not receive higher education (well-being index of 0.42 versus 0.63, respectively).

In August 2022, the respective figures fell and converged, coming in at 0.31 and 0.43, while in September 2023 the convergence continued, at 0.40 and 0.44. This indicates that investments made in education do not provide a significant and sustainable advantage to diploma holders, at least in material terms.

People’s assessments of changes in their personal well-being are closely correlated with their attitudes toward the conflict in Ukraine. The data from September 2023 shows that Russians who support the special military operation report a deterioration in their financial situation much less often than those who openly oppose it (0.56 versus 0.18).

Compared to August 2022, this ratio has remained virtually unchanged (0.50 versus 0.13). It is possible that the broadly deteriorating well-being of Russians will likely weaken backing for the special operation, while support for the war effort might increase should people see their financial situation change for the better.
Share this article
Read More
You consent to processing your personal data and accept our privacy policy